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Labour limbers up for election fight with plan to drop top earners' pension tax relief

by David Campbell on Jan 04, 2013 at 10:26

Labour limbers up for election fight with plan to drop top earners' pension tax relief

Shadow chancellor Ed Balls will today announce a planned £1 billion reduction in pensions tax relief for high earners to fund a job creation programme for the long-term unemployed.

The proposal would mean those earning above £150,000 would receive the same relief on their pensions pots as basic-rate taxpayers.

Balls' proposal is one of Labour’s first concrete policy ideas as it limbers up for the 2015 election and attempts to close the gap between the party and the rival Conservatives on economic trust.

While the party has polled around 10% ahead of the Tories over the past year, it has yet to close the gap public perceptions of economic competence, which remains tarnished by the last government.

‘When times are tough it cannot be right that we subsidise the pension contributions of the top 2% of earners at more than double the rate of people on average incomes paying the basic rate of tax,’ said Balls.

The money saved would be used to fund minimum wage jobs for anyone out of work for more than two years. Former Labour chancellor Alistair Darling had announced a similar plan in 2009, which was dropped under the coalition, in favour of a tighter cap on contributions eligible for relief.

3 comments so far. Why not have your say?

Ian Skinner

Jan 04, 2013 at 11:28

So Labour have learnt nothing from their disatrous raid on pensions; Balls cannot be trusted to run a sweet shop

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Checking facts first

Jan 04, 2013 at 11:46

Mr Skinner above is spot on. If Labour are trying to discourage saving and investment this is a great way to do it. There is also the risk (albeit diminished with the £1.25m lifetime allowance) of double ataxation - only lower band tax relief when contributions made but higher tax paid when pension drawn. Balls really is a contemptuous political parasite on society.

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Marcus Aurelius

Jan 04, 2013 at 14:26

What happens when everyone decides "sod it let's rely on the state for our needs", who pays for that?

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